Britain's bankers are set to splash out £1bn of bonus money on luxury homes in the capital next year – although City types are being crowded out of central London by higher taxes and competition from wealthy foreigners.

Estate agent Savills says City professionals are tightening their belts, but only modestly. Total bonus money spent on property in the capital is forecast to fall by 17% in comparison to this year's figure of £1.2bn.

New European guidelines encouraging banks to pay bonuses in shares, rather than cash, are making it harder for City professionals to get large mortgages from high-street lenders – many are turning to specialist private banks for their personal finances. Bonus money is none the less expected to restrict any fall in the capital's top-end property prices to 1% during 2011, compared with 3% drop in home prices for Britain as a whole.

"They're going to be taxed more heavily and they're getting more of their bonuses in deferred shares," said Lucian Cook, director of residential research at Savills. "I don't think we're going to see the kind of massive flow of bonus money that we saw into the market back in 2006 and 2007."

For all their wealth, bankers are being squeezed out of expensive central districts such as Belgravia and Kensington by overseas buyers, largely from Russia and the Middle East. Financiers are tending to flock to a "banker-broker belt" in the west of the city, stretching from Fulham to Clapham, Wandsworth, Richmond and Wimbledon south of the Thames, plus a handful of areas in north London such as Islington and Hampstead.

"The two biggest groups we're seeing buying in central London are from the Middle East and from Russia," said Cook. "It does mean that unless you're on a mega-bonus, it's becoming more likely that you're going to buy your home in south-west London."Figures from the Centre for Economic and Business Research suggest bankers' bonuses will be down by 5% to £7bn this year and will be 13% lower after the impact of higher taxes. The bonus pot is 45% lower than its pre-recession peak in 2007.